BG Group sunk by delays at Jasmine Field

Thursday's quarterly results for BG Group have been a case study in how the press and the markets can diverge. Most outlets were cockahoop about the numbers but the stock had fallen 2.9 per cent by 11:20. The question is why?

On the surface things looked rosy with net earnings sharply up on last year, and the group promising more growth from new production.

The trouble is, deep in the results, there is a brief sentence saying: "In April, the operator of the Jasmine field (BG Group 30.5%, non-operated) advised that production start-up is not now expected until 2013."

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This is significant news; the Jasmine field is a huge discovery made in 2006 in the North Sea. Its operator and 36.5% owner, US outfit ConocoPhillip, had pencilled in production to start by the end of this year, it now seems next year is more likely - and investors become very wary when delays start creeping into major projects.

The Jasmine delay allied to continuing concerns over a gas leak on the Elgin platform, also in the North Sea, in which BG Group has a 14% stake probably explain today's sharp drop.

The rest of the news though is strong for BG. It is to raise $1.8bn by selling its 60% stake in Brazil's biggest gas distribution business, Comgas, to another Brazilian player, Cosan.

On top of that, the numbers during the first quarter look more than satisfactory: total operating profit was up 21% to $2.37bn from $1.97bn a year earlier. Net earnings rose by 55% to $1.27bn from a restated $819m the year before.

Earnings per share rose in line with net income to 37.3 cents from 24.2 cents in the first quarter of 2011.

"Our LNG [liquefied natural gas] business was up 42% to $812m, boosted by continuing strong demand from Asian markets," noted BG's Chief Executive, Sir Frank Chapman.

Commenting on the Elgin gas leak Chapman said the group is continuing to work closely with French oil group Total, which is the operator of the field, "to ensure the issue is resolved in a safe and timely manner."

BS